IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v190y2017icp191-203.html
   My bibliography  Save this article

Levelized cost of electricity for solar photovoltaic and electrical energy storage

Author

Listed:
  • Lai, Chun Sing
  • McCulloch, Malcolm D.

Abstract

With the increasing technological maturity and economies of scale for solar photovoltaic (PV) and electrical energy storage (EES), there is a potential for mass-scale deployment of both technologies in stand-alone and grid-connected power systems. The challenge arises in analyzing the economic projections on complex hybrid systems utilizing PV and EES. It is well known that PV power is of diurnal and stochastic nature, and surplus electrical energy is generally available in midday during high irradiance levels. EES does not produce energy as it is not a conventional generator source. Commonly, the cost of a generating asset or the power system is evaluated by using levelized cost of electricity (LCOE). In this paper, a new metric levelized cost of delivery (LCOD) is proposed to calculate the LCOE for the EES. A review on definitions in LCOE for PV hybrid energy systems is provided. Four years of solar irradiance data from Johannesburg and the national load data from Kenya are obtained for case studies. The proposed cost calculation methods are evaluated with two types of EES, namely Vanadium redox flow battery (VRB) and Lithium-ion (Li-ion) battery. It shows that the marginal LCOE and LCOD indices can be used to assist policymakers to consider the discount rate, the type of storage technology and sizing of components in a PV-EES hybrid system.

Suggested Citation

  • Lai, Chun Sing & McCulloch, Malcolm D., 2017. "Levelized cost of electricity for solar photovoltaic and electrical energy storage," Applied Energy, Elsevier, vol. 190(C), pages 191-203.
    • Handle: RePEc:eee:appene:v:190:y:2017:i:c:p:191-203
    DOI: 10.1016/j.apenergy.2016.12.153
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030626191631933X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2016.12.153?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Peters, Michael & Schmidt, Tobias S. & Wiederkehr, David & Schneider, Malte, 2011. "Shedding light on solar technologies'A techno-economic assessment and its policy implications," Energy Policy, Elsevier, vol. 39(10), pages 6422-6439, October.
    2. Obi, Manasseh & Jensen, S.M. & Ferris, Jennifer B. & Bass, Robert B., 2017. "Calculation of levelized costs of electricity for various electrical energy storage systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 908-920.
    3. Mundada, Aishwarya S. & Shah, Kunal K. & Pearce, J.M., 2016. "Levelized cost of electricity for solar photovoltaic, battery and cogen hybrid systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 692-703.
    4. Rehman, Shafiqur & Bader, Maher A. & Al-Moallem, Said A., 2007. "Cost of solar energy generated using PV panels," Renewable and Sustainable Energy Reviews, Elsevier, vol. 11(8), pages 1843-1857, October.
    5. Allan, Grant & Gilmartin, Michelle & McGregor, Peter & Swales, Kim, 2011. "Levelised costs of Wave and Tidal energy in the UK: Cost competitiveness and the importance of "banded" Renewables Obligation Certificates," Energy Policy, Elsevier, vol. 39(1), pages 23-39, January.
    6. Colmenar-Santos, Antonio & Campíñez-Romero, Severo & Pérez-Molina, Clara & Castro-Gil, Manuel, 2012. "Profitability analysis of grid-connected photovoltaic facilities for household electricity self-sufficiency," Energy Policy, Elsevier, vol. 51(C), pages 749-764.
    7. Erdinc, O. & Uzunoglu, M., 2012. "Optimum design of hybrid renewable energy systems: Overview of different approaches," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(3), pages 1412-1425.
    8. Wissem, Zghal & Gueorgui, Kantchev & Hédi, Kchaou, 2012. "Modeling and technical–economic optimization of an autonomous photovoltaic system," Energy, Elsevier, vol. 37(1), pages 263-272.
    9. Orioli, Aldo & Di Gangi, Alessandra, 2015. "The recent change in the Italian policies for photovoltaics: Effects on the payback period and levelized cost of electricity of grid-connected photovoltaic systems installed in urban contexts," Energy, Elsevier, vol. 93(P2), pages 1989-2005.
    10. Branker, K. & Pathak, M.J.M. & Pearce, J.M., 2011. "A review of solar photovoltaic levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4470-4482.
    11. Ondraczek, Janosch, 2014. "Are we there yet? Improving solar PV economics and power planning in developing countries: The case of Kenya," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 604-615.
    12. Ouyang, Xiaoling & Lin, Boqiang, 2014. "Levelized cost of electricity (LCOE) of renewable energies and required subsidies in China," Energy Policy, Elsevier, vol. 70(C), pages 64-73.
    13. Hoppmann, Joern & Volland, Jonas & Schmidt, Tobias S. & Hoffmann, Volker H., 2014. "The economic viability of battery storage for residential solar photovoltaic systems – A review and a simulation model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 1101-1118.
    14. Parrado, C. & Girard, A. & Simon, F. & Fuentealba, E., 2016. "2050 LCOE (Levelized Cost of Energy) projection for a hybrid PV (photovoltaic)-CSP (concentrated solar power) plant in the Atacama Desert, Chile," Energy, Elsevier, vol. 94(C), pages 422-430.
    15. Reichelstein, Stefan & Yorston, Michael, 2013. "The prospects for cost competitive solar PV power," Energy Policy, Elsevier, vol. 55(C), pages 117-127.
    16. Michael Jakob, 2012. "The fair cost of renewable energy," Nature Climate Change, Nature, vol. 2(7), pages 488-489, July.
    17. Rose, Amy & Stoner, Robert & Pérez-Arriaga, Ignacio, 2016. "Prospects for grid-connected solar PV in Kenya: A systems approach," Applied Energy, Elsevier, vol. 161(C), pages 583-590.
    18. Narayanan, Shankar & Li, Xiansen & Yang, Sungwoo & Kim, Hyunho & Umans, Ari & McKay, Ian S. & Wang, Evelyn N., 2015. "Thermal battery for portable climate control," Applied Energy, Elsevier, vol. 149(C), pages 104-116.
    19. Schill, Wolf-Peter, 2014. "Residual load, renewable surplus generation and storage requirements in Germany," Energy Policy, Elsevier, vol. 73(C), pages 65-79.
    20. Alotto, Piergiorgio & Guarnieri, Massimo & Moro, Federico, 2014. "Redox flow batteries for the storage of renewable energy: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 325-335.
    21. Locatelli, Giorgio & Palerma, Emanuele & Mancini, Mauro, 2015. "Assessing the economics of large Energy Storage Plants with an optimisation methodology," Energy, Elsevier, vol. 83(C), pages 15-28.
    22. Rehman, Shafiqur & Al-Hadhrami, Luai M., 2010. "Study of a solar PV–diesel–battery hybrid power system for a remotely located population near Rafha, Saudi Arabia," Energy, Elsevier, vol. 35(12), pages 4986-4995.
    23. Gómez, Antonio & Dopazo, César & Fueyo, Norberto, 2016. "The “cost of not doing” energy planning: The Spanish energy bubble," Energy, Elsevier, vol. 101(C), pages 434-446.
    24. Garvey, S.D. & Eames, P.C. & Wang, J.H. & Pimm, A.J. & Waterson, M. & MacKay, R.S. & Giulietti, M. & Flatley, L.C. & Thomson, M. & Barton, J. & Evans, D.J. & Busby, J. & Garvey, J.E., 2015. "On generation-integrated energy storage," Energy Policy, Elsevier, vol. 86(C), pages 544-551.
    25. Wang, Xiaoting & Kurdgelashvili, Lado & Byrne, John & Barnett, Allen, 2011. "The value of module efficiency in lowering the levelized cost of energy of photovoltaic systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4248-4254.
    26. Denholm, Paul & Margolis, Robert M., 2007. "Evaluating the limits of solar photovoltaics (PV) in electric power systems utilizing energy storage and other enabling technologies," Energy Policy, Elsevier, vol. 35(9), pages 4424-4433, September.
    27. Zakeri, Behnam & Syri, Sanna, 2015. "Electrical energy storage systems: A comparative life cycle cost analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 569-596.
    28. Mandelli, Stefano & Brivio, Claudio & Colombo, Emanuela & Merlo, Marco, 2016. "A sizing methodology based on Levelized Cost of Supplied and Lost Energy for off-grid rural electrification systems," Renewable Energy, Elsevier, vol. 89(C), pages 475-488.
    29. Liu, Gang & Rasul, M.G. & Amanullah, M.T.O. & Khan, M.M.K., 2012. "Techno-economic simulation and optimization of residential grid-connected PV system for the Queensland climate," Renewable Energy, Elsevier, vol. 45(C), pages 146-155.
    30. Luo, Xing & Wang, Jihong & Dooner, Mark & Clarke, Jonathan, 2015. "Overview of current development in electrical energy storage technologies and the application potential in power system operation," Applied Energy, Elsevier, vol. 137(C), pages 511-536.
    31. Kyriakopoulos, Grigorios L. & Arabatzis, Garyfallos, 2016. "Electrical energy storage systems in electricity generation: Energy policies, innovative technologies, and regulatory regimes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 1044-1067.
    32. Ondraczek, Janosch & Komendantova, Nadejda & Patt, Anthony, 2015. "WACC the dog: The effect of financing costs on the levelized cost of solar PV power," Renewable Energy, Elsevier, vol. 75(C), pages 888-898.
    33. Denholm, Paul & Hand, Maureen, 2011. "Grid flexibility and storage required to achieve very high penetration of variable renewable electricity," Energy Policy, Elsevier, vol. 39(3), pages 1817-1830, March.
    34. Wade, N.S. & Taylor, P.C. & Lang, P.D. & Jones, P.R., 2010. "Evaluating the benefits of an electrical energy storage system in a future smart grid," Energy Policy, Elsevier, vol. 38(11), pages 7180-7188, November.
    35. Ghafoor, Abdul & Munir, Anjum, 2015. "Design and economics analysis of an off-grid PV system for household electrification," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 496-502.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lai, Chun Sing & Locatelli, Giorgio & Pimm, Andrew & Tao, Yingshan & Li, Xuecong & Lai, Loi Lei, 2019. "A financial model for lithium-ion storage in a photovoltaic and biogas energy system," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
    2. Shen, Wei & Chen, Xi & Qiu, Jing & Hayward, Jennifier A & Sayeef, Saad & Osman, Peter & Meng, Ke & Dong, Zhao Yang, 2020. "A comprehensive review of variable renewable energy levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    3. Tervo, Eric & Agbim, Kenechi & DeAngelis, Freddy & Hernandez, Jeffrey & Kim, Hye Kyung & Odukomaiya, Adewale, 2018. "An economic analysis of residential photovoltaic systems with lithium ion battery storage in the United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 1057-1066.
    4. Hoppmann, Joern & Volland, Jonas & Schmidt, Tobias S. & Hoffmann, Volker H., 2014. "The economic viability of battery storage for residential solar photovoltaic systems – A review and a simulation model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 1101-1118.
    5. Antweiler, Werner, 2021. "Microeconomic models of electricity storage: Price Forecasting, arbitrage limits, curtailment insurance, and transmission line utilization," Energy Economics, Elsevier, vol. 101(C).
    6. Alexandra G. Papadopoulou & George Vasileiou & Alexandros Flamos, 2020. "A Comparison of Dispatchable RES Technoeconomics: Is There a Niche for Concentrated Solar Power?," Energies, MDPI, vol. 13(18), pages 1-22, September.
    7. Tao, Jacqueline Yujia & Finenko, Anton, 2016. "Moving beyond LCOE: impact of various financing methods on PV profitability for SIDS," Energy Policy, Elsevier, vol. 98(C), pages 749-758.
    8. Andreolli, Francesca & D’Alpaos, Chiara & Moretto, Michele, 2022. "Valuing investments in domestic PV-Battery Systems under uncertainty," Energy Economics, Elsevier, vol. 106(C).
    9. Lai, Chun Sing & Locatelli, Giorgio, 2021. "Economic and financial appraisal of novel large-scale energy storage technologies," Energy, Elsevier, vol. 214(C).
    10. Zhao, Zhen-Yu & Chen, Yu-Long & Thomson, John Douglas, 2017. "Levelized cost of energy modeling for concentrated solar power projects: A China study," Energy, Elsevier, vol. 120(C), pages 117-127.
    11. Martin, Nigel & Rice, John, 2021. "Power outages, climate events and renewable energy: Reviewing energy storage policy and regulatory options for Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    12. Cárdenas, Bruno & Ibanez, Roderaid & Rouse, James & Swinfen-Styles, Lawrie & Garvey, Seamus, 2023. "The effect of a nuclear baseload in a zero-carbon electricity system: An analysis for the UK," Renewable Energy, Elsevier, vol. 205(C), pages 256-272.
    13. Hernández-Moro, J. & Martínez-Duart, J.M., 2013. "Analytical model for solar PV and CSP electricity costs: Present LCOE values and their future evolution," Renewable and Sustainable Energy Reviews, Elsevier, vol. 20(C), pages 119-132.
    14. Efstathios E. Michaelides, 2021. "Thermodynamics, Energy Dissipation, and Figures of Merit of Energy Storage Systems—A Critical Review," Energies, MDPI, vol. 14(19), pages 1-41, September.
    15. Lang, Tillmann & Gloerfeld, Erik & Girod, Bastien, 2015. "Don׳t just follow the sun – A global assessment of economic performance for residential building photovoltaics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 932-951.
    16. Cruz, Marco R.M. & Fitiwi, Desta Z. & Santos, Sérgio F. & Catalão, João P.S., 2018. "A comprehensive survey of flexibility options for supporting the low-carbon energy future," Renewable and Sustainable Energy Reviews, Elsevier, vol. 97(C), pages 338-353.
    17. Zou, Hongyang & Du, Huibin & Brown, Marilyn A. & Mao, Guozhu, 2017. "Large-scale PV power generation in China: A grid parity and techno-economic analysis," Energy, Elsevier, vol. 134(C), pages 256-268.
    18. Papadopoulos, Agis M., 2020. "Renewable energies and storage in small insular systems: Potential, perspectives and a case study," Renewable Energy, Elsevier, vol. 149(C), pages 103-114.
    19. Jamal, Taskin & Urmee, Tania & Calais, Martina & Shafiullah, GM & Carter, Craig, 2017. "Technical challenges of PV deployment into remote Australian electricity networks: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 1309-1325.
    20. Orioli, Aldo & Di Gangi, Alessandra, 2017. "Six-years-long effects of the Italian policies for photovoltaics on the grid parity of grid-connected photovoltaic systems installed in urban contexts," Energy, Elsevier, vol. 130(C), pages 55-75.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:190:y:2017:i:c:p:191-203. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.